3 Pandemic Influenced Trends In Commercial Real Estate

1. Workspace changes 

Based on the Center for Disease Control (CDC) recommendation to maintain a six foot social distance, many companies will be making changes to their office space before reopening. What are some things we are recommending our clients consider?

What is your daily maximum capacity? Rearranging your workspace may not be possible. Once you have determined which desks can be utilized and additional areas, like conference rooms, have been converted into additional desk space or left as is, what is the maximum number of employees that can safely occupy your office space?

What is the cost? Each company will have to decide how much to spend and where. The health and safety of employees is at the forefront. We advise our clients to ask their landlord what  protocols have been implemented for their safety and what ongoing initiatives are planned to continually promote health and wellness. 

Who’s the authority for oversight and accountability? Once you have reconfigured your office space to ensure your employees are safe, consider appointing a “Pandemic Officer”, ideally with decision-making authority, to answer questions, make sure office space continues to meet CDC guidelines and employees are considering the safety of others.

2. Increase in available subleases

At Wildmor Advisors, we are actively tracking the submarket subleasing fluctuations, as well as vacancy rate changes since March 16, 2020. The amount of available sublease office space on the Atlanta market has increased by 3.8% over the past 60 days. Our clients who are subleasing office space at this time are doing so as a cost recovery strategy. Besides cost savings, what are some other things to consider before deciding to sublease your space?

How much office space do you need? This is the million dollar question most of our clients are seeking an answer to. Many companies have reported employees being more productive and happy working from home. Can those companies realistically plan to part with the extra square footage or even forgo office space all together? Large companies that have announced their employees will be working from home for the foreseeable future, haven’t made any major real estate changes yet. As we see shifts in the commercial real estate market, we will continue to update our clients.

Sublease recovery? Now that we have seen a spike in sublease activity (39 new office space subleases totalling 2,244,879 square feet have been added to the Atlanta market in the past 60 days), our clients need to consider how their space compares with other available subleases and the recovery they can expect. Wildmor specializes in helping our clients strategically analyze the various scenarios associated with subleasing all or a portion of their office space.

3. Rise in demand for Industrial Space 

According to Adobe’s Digital Economy Index, e-commerce was up 49% in April, compared to the baseline in early March when the stay at home orders were not fully in place. As e-commerce ramps up, manufacturing and distribution companies are looking to expand their warehouse/industrial operations to keep up with demand. Atlanta has more than 400 million square feet of Industrial space and is the second leading city in the U.S. for this real estate class. What should you consider if you’re looking into acquiring additional industrial space?

Will the amount of available Industrial space on the market decrease? We believe that it likely will. The graph below is the availability rate of industrial spaces in the greater Atlanta area. We did see a brief spike in mid Q1, but are expecting to see the availability of industrial space trend downward in months to come.

How much leverage is there for negotiations? Due to basic economic supply and demand factors, tenant leverage could tighten in negotiations for a more limited supply of available industrial space. Overall, the asking rental rates per square foot for industrial space are expected to continue to increase through Q2 of 2020.

Mixed-Use Dunwoody Project to Commence This Year.

‘High Street’ is set to become a reality this year in Dunwoody’s Perimeter Center. 

The ‘High Street’ developers are hoping to update the Perimeter Mall area with the trendy shops, entertainment and restaurants that come along with a mixed-use project. Notably, this project with not rely on the traditional department store “anchor”- The trendy food-hall style dining and central outdoor space, along with a movie theater, will be he focal points of this modern center. A 25,000 SF center space, along with a boasted “Grand Staircase” will bring the wow-factor to the public and outdoor spaces.

“Our intent is that this really becomes the primary social hub, one of the core elements, of the entire Dunwoody community, and (we) really want the community and its residents to have a sense of ownership over it,” said James Linsley, the president of GID Development Group, standing over a 3D model of the High Street design on Wednesday.

With current plans to see the first phase opening sometime in 2022, demolition of two near-by office buildings will make way for the second phase of the project. The second phase will include office, retail, and hotel space, along with 2,400 residences. 

Discover Dunwoody, the official destination marketing organization for the city of Dunwoody, released research showing that visitors as well as residents are looking for dining and entertainment venues where they can spend more time. High Street is currently set to fit the bill, with comparisons to its neighbors The Avalon in Alpharetta and The Battery in Cobb.

“There’s the mall, which is great, but it’s a little bit of a different generation of product. This is where the new world of retail and mixed-use real estate is headed.” James Linsley.

More Mixed- Use Mega- Developments Move into Dunwoody

With Dunwoody’s proximity to I-285, GA 400, and Marta rail it’s no big surprise the area is the next in the Mixed-Use development phenomenon that is spreading through Atlanta. The "Central Perimeter" market is the largest submarket in Atlanta metropolitan area with over 35,000,000 square feet.   The central location allows companies to recruit easier from the whole metro area as it sits in the middle of the Northern suburbs.  With “ease of access” as the theme, these Transit Oriented Developments (TOD’s) projects will truly transform the landscape of the area.  These TOD'S sites are the first developers choose to leverage retail exposure and ridership with our MARTA system.

Three impressive developments are in process or plan to break ground this year.

Park Center, located at the intersection of Hammond Dr. and Perimeter Center Pkwy. Park Center is working on phase II as phase I was completed the end of 2016. Phase II will be a larger project, which will include two office towers, a pedestrian bridge that connects to Phase I, and a Dunwoody Marta Station. It will also have all of the mixed-use amenities which include restaurants, retail, and residential housing. The two office towers have a complete date of January 2020 for the first, and January 2021 for the second. An appealing aspect of the plan includes a multi-use trail and public space to surrounding parks.

Twelve24, located at 1224 Hammond Dr. in Dunwoody, broke ground in July 2018.  With completion ending some time in February 2020 this project will add 334,000 SF of Class A office space and 11,000 SF of restaurant and retail space. Insight Global is already confirmed to occupy about 50% of the building space.  Developers boast a large open floor plan with floor-to-ceiling glass, extensive outdoor terraces and “best-in-class” amenities.

High Street, will be located at Perimeter Center Park and Hammond Drive near the Dunwoody Marta Station. Though plans for this development started over 10 years, they reemerged in 2015-with realization now just around the corner. Ground-breaking is expecting towards the end of 2019, and this 40-acre plan looks to be one of the largest projects in the area. The first phase includes four 8-story apartment buildings, a row of townhomes, and a 16-story apartment building, 12-story office tower and a 7-story parking deck. While not confirmed, ground floor restaurants and retail have been mentioned.

A.I. In Your Business

Artificial Intelligence (AI) is used in several platforms, over a broad spectrum of different businesses. We know AI is useful and can benefit your business. So, how can it be used to GROW your business?

 On April 30th Wildomar Advisors hosted an event entitled “Harnessing AI to Grow your Business”, along with Tracy and Michael Levine of Advantage Talent, Inc. Several Executives in the area were invited to join to create hear Tracy and Mike’s knowledge on the topic of AI and utilizing it to grow your company.

 The following highlights some of the take-aways from the presentation:

 DISC. It is no longer who you know, but who you are. Through the DISC system, Tracy and Mike create what they call your “Living Logo”. DISC is a powerful tool to understanding people. It is a method of identifying predictable actions and personality traits within human behavior.   Using the DISC system, more companies are finding you, before you find them. It has been established that finding the person that fits your company best- versus what person you may like the most, is what moves a company forward. And most attendees to our event agreed! The most beneficial aspect of the information was how it related to not only retaining the right employees, but attracting the right employees.

GPE2, stands for Growth, Profit, Efficiency, and Engagement. This is the magic combination for success. AI helps increase Profit, make hiring more efficient. Using AI to helps choose the proper employees to nurture an engaging work culture.

Soft Skills. Soft Skills have become more in-demand in the workplace. Businesses have noticed that creativity, adaptability, time management and collaborative skills enhance the company forward motion. These skills advance enough more efficiently than hard skills have in the past.

Netflix. Yes, Netflix. They are just one of the many innovative companies that have been using AI on you, and you may not have noticed. Amazon streaming, Online retailers, and Social Media platforms, all use AI algorithms to make sure you have the best experience when using their services. Knowing they have succeeded with AI, why not try AI too.

Implementing AI in your business can assist in keeping your company relevant, innovative, and engaged with customers and employees. Customers and employees are what drives a business to fail, or to succeed. Using AI to analysis how you build your company is the first step in harnessing AI to grow your business.

Here at Wildmor our Executives have been working with Advantage Talent, Inc to discover their “Living Logo” to utilize their brand optimization. Or in other words, detecting their true strengths to better the business.

285 @ 400 Project Update

The 285 @ 400 Project  was designed to help reduce traffic congestion and enhance safety in the area near the I-285/SR 400 interchange in metro Atlanta. This priority project adds new flyover ramps, new collector-distributor lanes and other facilities to aid east-west travel along I-285 and north-south travel along SR 400. The project will improve 4.3 miles of I-285 from west of Roswell Road to east of Ashford Dunwoody Road and 6.2 miles along SR 400 from the Glenridge Connector to Spalding Drive.

It was announced in April that the project would be delayed an additional six months due to added projects. Originally, the project included only replacing two bridge decks. But GDOT decided to replace the entire bridge structures while the area was already under construction. GDOT has added two new I-285 bridges to the project and will widen both roads underneath the interstate. Although this has added additional time, they noted that that it will not add any additional cost. This extra work will also allow the district and GDOT to build a connection to Path 400 under I-285 at Peachtree-Dunwoody.

We reached out to Perimeter Connects (perimterconnect.com) who provided the following insights:

Current major modifications to traffic are in three places:

• Peachtree Dunwoody Rd – Northbound under 285 is one lane, instead of two. This will continue until the end of the project (Q4 2020)

• Glenridge Dr – Southbound under 285 is one lane, instead of two. This will also stay in this format until Q4 2020.

• Abernathy Rd – Westbound left turn onto 400 will be one lane instead of two, beginning May 31st. Will stay this way until the shift to the Diverging Diamond design, sometime in 2020.

• Most construction activity is along 400 and 285, but there should be no impacts to traffic outside of nights and weekends (other lane closures and notable changes are only implemented during nights and weekends).

• The GA400 Express Lanes project will begin construction sometime in 2021, after the 285 @ 400 Project  is completed. This project will extend north from North Springs station, and impacts on the immediate area should be modest.

With construction as part of the daily commute for a least another year (or two) it is a good idea to stay up to date on the area. I know we will be keeping our eyes on it.

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